Identifying Inefficient Fossil Fuel Subsidies in Canada

The policy brief argues that Canada lacks a shared definition of 'inefficient fossil fuel subsidies,' which hinders its commitment to phase them out. It proposes a four-part assessment framework—alignment with climate commitments, support for a low-carbon economy, just transition consistency, and overall policy effectiveness—to ensure transparency and accountability in eliminating these subsidies.

• Canada faces a significant gap in defining 'inefficient fossil fuel subsidies,' with no universally endorsed definitions for what constitutes a subsidy, what makes it inefficient, or what constitutes wasteful consumption.
• Substantial fossil fuel subsidies persist in Canada; federal subsidies totaled at least CAD 1.91 billion in 2020, while the provinces of Alberta, British Columbia, Saskatchewan, and Newfoundland and Labrador provided at least CAD 2.5 billion in the 2020/2021 fiscal year.
• The authors propose four criteria to determine if a subsidy is efficient: alignment with climate commitments, support for a low-carbon economy, consistency with just transition principles, and whether it is the best way to achieve the overall policy goal.
• Subsidies that support new or updated fossil fuel infrastructure or facilitate exports are likely incompatible with net-zero goals, as they enable continued extraction and contribute to scope 3 emissions.
• Fossil fuel subsidies create market distortions that oppose carbon pricing and increase the risk of stranded assets, with Canada's potential losses from stranded fossil fuel assets estimated at approximately USD 100 billion.
• Subsidies that draw workers into sectors destined to shrink by 2050 violate just transition principles by failing to anticipate employment impacts or provide sustainable social protection and skills development.
• While some subsidies for remote and northern communities reliant on diesel provided energy access (totaling CAD 2.37 million in 2020), they can still act as barriers to sustainable alternatives.

APA

Boisseau-Bouvier, É., & Cameron, L. (2022). Identifying Inefficient Fossil Fuel Subsidies in Canada. International Institute for Sustainable Development. https://www.iisd.org/system/files/2022-07/inefficient-fossil-fuel-subsidies-canada-en.pdf

Chicago

Boisseau-Bouvier, Émile, and Laura Cameron. Identifying Inefficient Fossil Fuel Subsidies in Canada. International Institute for Sustainable Development, 2022. https://www.iisd.org/system/files/2022-07/inefficient-fossil-fuel-subsidies-canada-en.pdf.

Wikipedia

{{cite report |last1=Boisseau-Bouvier |first1=Émile |last2=Cameron |first2=Laura |title=Identifying Inefficient Fossil Fuel Subsidies in Canada |publisher=International Institute for Sustainable Development |date=July 2022 |url=https://www.iisd.org/system/files/2022-07/inefficient-fossil-fuel-subsidies-canada-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{boisseaubouvier2022identifying, author = {Boisseau-Bouvier, Émile and Cameron, Laura}, title = {{Identifying Inefficient Fossil Fuel Subsidies in Canada}}, institution = {International Institute for Sustainable Development}, year = {2022}, month = jul, url = {https://www.iisd.org/system/files/2022-07/inefficient-fossil-fuel-subsidies-canada-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }